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Don't Be Fooled: Credit Union Customers Pay Fees, Too

NEW YORK ( TheStreet) -- This time last year, Americans were taking to the streets in protest of rising bank fees and switching their money from big banks to credit unions en masse. According to a 2011 survey performed by the National Association of Federal Credit Unions, 54% of credit unions reported an increase in deposits after Bank Transfer Day in 2011. Making the switch, though, may have benefited credit unions more than it did their new members.

Ever since the Occupy Wall Street and Bank Transfer Day movements, depositors are advised again and again that switching to a credit union will solve their big-bank dilemma of numerous, costly fees. Unfortunately, many who make the switch assume mistakenly that just because they're banking with a credit union, they're not going to be charged fees. The truth is that credit union members are just as vulnerable to fees as bank customers -- a fact that is rarely shared or acknowledged.

Harris Schanhaut had been a happy member of Teacher's Federal Credit Union in New York for more than 20 years. So when he planned to relocate his business to North Carolina and needed to open a bank account, Schanhaut turned to a local credit union without question.

That institution was First Flight Federal Credit Union . According to Schanhaut, "This was for business-related expenses that my company would reimburse me for via direct deposit, and I would pay the company card directly via the credit union's online service. I was shocked to discover they charged transaction fees for online banking."

First Flight told him that he could come into the branch perform transactions in person to avoid the fee. The credit union offered inconvenient hours, though. "I worked full-time and the credit union was open just one hour per week when I was not working. I dropped them and they charged me a fee to close my account," Schanhaut says.

After leaving First Flight, he instead opened an account with Wood Forest Bank , where he paid no fees and could visit the branch on weekends.

Unfortunately, Schanhaut's experience is not unusual. The reality is that while credit unions in general have fewer fees, plenty still charge fees comparable to those of big banks, and quite a few credit unions that used to offer products such as free checking accounts have recently begun implementing account minimums and fees.

Weighing the cost of credit union fees

Pentagon Federal Credit Union , more commonly known as PenFed, is an example of a national credit union with a reputation for having some of the steepest fees among financial nonprofits. They also offer just about the most competitive loan rates in the country, though. Depending on members' needs and goals, maintaining a $500 minimum deposit in a checking account to avoid a $10 monthly maintenance fee may be well worth it if banking with the credit union also provides the opportunity to finance a new car at just 1.49% APR.